What is a buy-to-let mortgage?
A buy-to-let (BTL) mortgage is a loan used to buy a property you intend to rent out rather than live in. Lenders assess it differently from a residential mortgage — largely on the rent the property can generate, not just your personal income.
- Plain English, about 6 minutes
- General information, not advice
- No invented rates
The short version
You put down a deposit, borrow the rest against the property, and the rent you charge tenants is expected to cover the mortgage payment with room to spare. Most buy-to-let mortgages in the UK are interest-only by default (though repayment options exist), meaning your monthly payment covers only the interest — the capital is typically repaid by selling the property, remortgaging, or another repayment plan you've arranged.
How it differs from a residential mortgage
| Residential mortgage | Buy-to-let mortgage |
|---|---|
| Affordability based mainly on your income and outgoings | Affordability based mainly on the property's expected rental income |
| Usually repayment (capital + interest) | Commonly interest-only, though repayment is available |
| Deposits from around 5–10% are widely available | Lenders typically want a noticeably larger deposit — see below |
| Most residential lending is FCA-regulated | Most standard BTL lending is not FCA-regulated (it's treated as business lending) — "consumer buy-to-let" is the exception |
How lenders decide how much you can borrow
Instead of just looking at your salary, BTL lenders typically apply a rental cover (or "interest coverage ratio", ICR) test: they check that the rent comfortably covers the mortgage interest, often calculated at a notional "stress" rate that can be higher than the actual pay rate, so you're not left exposed if rates rise. Requirements vary a lot by lender, by whether you pay tax at the higher rate, and by whether you're taking a shorter or longer fixed rate — there's no single number that applies to everyone.
Your personal income usually still matters too (many lenders want a minimum income, e.g. from employment or other property), and your credit history, existing borrowing, and the property type all factor in.
Try it with your own numbers
Our rental cover calculator lets you enter a loan amount, expected rent, and your own stress-rate and cover-ratio assumptions to see how the maths works — it won't tell you what any specific lender requires today.
Deposits and loan-to-value
Buy-to-let mortgages generally ask for a larger deposit than residential ones. Many mainstream lenders look for a minimum deposit somewhere in the region of a fifth to a quarter of the property's value (i.e. a maximum loan-to-value, LTV, of roughly 75–80%), though this varies by lender, product and property type, and can be higher for specialist properties like HMOs or holiday lets. Always check current LTV limits directly with a lender or broker.
Interest-only vs repayment
On an interest-only BTL mortgage, your monthly payment only covers interest, so the amount you owe doesn't reduce over the term — you need a credible plan to repay the capital at the end (sale, remortgage, savings, or other investments). Repayment (capital + interest) options are available from many lenders too, and would reduce the balance over time like a residential mortgage, at the cost of a higher monthly payment.
Who can typically get one
This varies by lender, but common starting points include being over a minimum age, often already owning your own home (though some lenders accept first-time buyers/first-time landlords), having a minimum personal income, and passing credit and rental-cover checks. None of this is a guarantee — every lender's criteria differ and can change, and meeting a general description doesn't mean you'll be accepted for a specific product.
What it costs beyond the mortgage
- Arrangement/product fees — often charged by the lender for setting up the mortgage.
- Broker fees — some brokers are fee-free (paid by the lender), others charge you directly; ask upfront.
- Valuation fee — the lender's own valuation of the property.
- Legal/conveyancing fees — for the purchase itself.
- Stamp Duty Land Tax (or the Scottish/Welsh equivalents) — an additional-property surcharge typically applies on top of standard rates; check current thresholds on gov.uk, as they change.
- Ongoing landlord costs — insurance, safety certificates, maintenance, letting agent fees if used, and periods with no tenant in place.
FAQ
Can I just get a normal mortgage and rent the property out anyway?
No — renting out a property on a standard residential mortgage without your lender's permission is normally a breach of your mortgage terms. If your circumstances change and you want to let a home you already live in, ask your existing lender about "consent to let" or look at remortgaging onto a buy-to-let product.
Is a bigger deposit always better?
A larger deposit (lower LTV) often opens up a wider range of products and can improve rental-cover calculations, but it also ties up more capital. Whether it's "better" depends on your wider finances and goals — this is exactly the kind of question worth putting to a broker.
Do I need to set up a limited company?
No, you can hold a buy-to-let property personally or through a limited company (often called an SPV) — each has different tax and lending implications. See our limited company buy-to-let guide.
Next step
Once you understand the shape of the decision, an independent broker can quote real, current rates for your situation. Compare independent brokers — and check anyone you speak to on the FCA Register first.